Hospital-employed physicians drain Medicare

Healthcare costs for four common procedures are rising as hospitals and health systems employ more physicians, according to a new study.

A 49% increase in hospital-employed physicians between 2012 and 2015 led to a $3.1 billion increase in Medicare costs related to four specific procedures in cardiology, orthopedics and gastroenterology, according to analysis from consulting firm Avalere Health.

Medicare paid $2.7 billion more for diagnostic cardiac catheterizations, echocardiograms, arthrocentesis and colonoscopies delivered in hospital outpatient settings than it would for treatment in independent facilities, while beneficiaries footed a $411 million higher bill.

Hospital-employed physicians performed more services in costlier hospital outpatient settings, resulting in up to 27% higher costs for Medicare and 21% for patients. For some of the procedures studied, employed physicians were seven times more likely to provide more services in a hospital outpatient setting than an independent physician’s office, which contradicts healthcare’s developing value-added mantra.

The employment trend seems to have shifted care to higher-cost locations, which is concerning, said Robert Seligson, president of the Physicians Advocacy Institute, which published the study last week. But the potential impact on quality still needs to be explored, he said.